Hey Snackers,
Disney has found a way to make Monday feel less like Monday: Baby Yoda-fy it. On "Mando Mondays," Disney will unleash Mandalorian merch. Let's just hope it doesn't look like this.
Stocks took a sharp dive Wednesday as Big Tech dragged the market lower.
Tesla stock falls 10% because Battery Day didn't live up to the hype
Who turned off Ludicrous mode?... On August 17, Tesla stock surged 11% on anticipatory Battery Day hype. Yesterday, it plunged 10% because the event was more e-yawn than Elon. Some analysts were expecting Elon to unveil game-changing tech, including a battery capable of 1M miles. Besides announcing orders for the $140K Model S Plaid, Tesla mostly just announced... its goals:
- A $25K Tesla capable of driving fully autonomously. That's ~$13K cheaper than its current cheapest model. ETA: 3 years.
- Production of 20M Tesla vehicles/year. That's more than all passenger vehicles sold in the US last year. In 2019, Tesla sold...367K vehicles. ETA: 2030 (via an Elon tweet).
- A “million mile” battery that could last an EV's entire lifetime. ETA: who knows.
Energizer Bunny, 50% off... The main theme here is cutting down the cost of batteries, which are the most expensive part of EVs. In 2019, the average car battery cost $15K. If Tesla wants to crank out that $25K model in 2023, it'll have to deliver on its ambitious goal of halving the cost of batteries in 3 years. Elon's promises don't always materialize (if they did, we'd have 1M self-driving Tesla robotaxis on the road now).
Tesla’s stock price assumes perfection for the next 10 years... Tesla is the most valuable car company in the world thanks to its soaring stock price. But Toyota and VW each delivered ~30X more cars than Tesla did in 2019, when it delivered 50% more vehicles than it did in 2018. To deliver 20M by 2030 assumes Tesla would have to keep growing at that fast rate for 10 years. Hyper-fast growth, especially in manufacturing, is usually not sustainable for that long — so it's unlikely. But if Tesla pulls it off, then its current $350B valuation will be worth it.
GoodRx, the Expedia of prescription drugs, surges 40% after going public
Not to be confused with RXBAR... This one won't get stuck in your teeth. GoodRx is a price comparison app for prescription drugs at local pharmacies. It offers free lists of discounts/coupons to cut prescription med costs. Like the Expedia of pills, GoodRx uses 150B pricing data points to show you the best deals for that blood pressure issue.
- GoodRx raised over $1B in its IPO on Tuesday night from "VIP" institutional investors (they get 1st dibs) who bought it at $33/share.
- The stock soared 53% Wednesday after GoodRx went public on the Nasdaq (for the rest of us), ending the day at $49/share.
This IPO jump actually makes sense... Nikola's stock doubled after its IPO and it hit a $19B market value without ever having sold a product. GoodRx is also now worth $19B — but it's the rare tech IPO whose business is actually profitable.
- It makes $$$ by collecting fees from the pharmacy benefits managers it works with (essentially, referral fees) — it has been profitable since 2016.
- It's growing fast. In just the 1st half of 2020, GoodRx made almost as much profit as it did in all of 2019 — $55M vs. $66M for all of 2019.
Healthcare is the last frontier of consumer tech disruption... GoodRX is the #1 most downloaded medical app with ~5M users because it fills two major gaps in healthcare: lack of affordability and lack of simplicity. Pharmaceuticals in America are so overpriced that there's plenty of room to undercut prices and still profit. GoodRx makes meds accessible with its app and presents us with actual options so we can comparison shop.
General Mills is desperate to keep up its growth, so it's making up new foods
Having a bowl... General Mills. The maker of Cheerios, Lucky Charms, and Cocoa Puffs saw its sales pop 10% last quarter. Cereal sales have fallen every year for the last decade, so... that's great. Instead of grabbing a Starbucks sammie on your way to work, you were eating cereal from a hoarded 10-pack as you WFH'd. That was great for processed food giant GM. But now, it has a problem...
"Increase the Stickiness"... GM's term for keeping demand up, according to slide 11 of its earnings deck. Now that the pandemic has lured customers back to Cinnamon Toast Crunch, GM needs to keep them. It's trying to do that in 2 ways:
- "Meaningful Renovation": Improving existing products (eg: Yoplait yogurt, now with "real fruit").
- "Relevant Innovation": Apparently, this involves bizarrely combining existing products (eg: Starburst-flavored Yoplait, Go-Gurt Slushie).
GM is incredibly un-confident that you'll stick with it... and we know that because of 1 expense: marketing. Like General Mills, Netflix saw its sales surge during pandemic. Netflix is confident that you're in for the long-term, so it's spending less on marketing than it did last year. Meanwhile, General Mills is jacking up marketing spend to prevent you from returning to your pre-pandemic brunch habits.
What else we’re Snackin’
- Future: Dunkin' and hospitality stands at sports stadiums test a new checkout-free payment system from Mastercard.
- Pinning: Pinterest adds a stories feature to its app, following Snap, Facebook, and Twitter — but Story Pins are invite-only for "creators."
- Wrap: Walmart will hire 20K seasonal employees for the 1st time in 5 years — it's prepping for the (online) holiday shopping surge.
- Electrify: Volkswagen unveils new $40K all-electric SUVs, available early next year.
- Vax: Johnson & Johnson becomes the latest company to enter final round Phase 3 testing for a coronavirus vaccine.
- Nikky: Nikola's talks with potential energy partners, including BP, have reportedly stalled after allegations that Nikola misled investors.
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Thursday
- Weekly jobless claims
- Earnings expected from Carnival, Costco, Rite Aid, and Darden Restaurants
Disclosure: Authors of this Snacks own shares of Apple and Amazon
ID: 1342234